How to Reduce Scope 3 Emissions: SBTi and Environmental Attributes Certificates (EACs)

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Recently, the SBTi published four technical documents. These documents aim to act as an early step in the process of the revision of the Corporate Net-Zero Standard. In this blog, we provide an overview of these recent developments and explain what they mean for businesses. We also provide expert advice on how to move forward with Scope 3 emissions reporting. 

What do these new developments mean?

The recent SBTi updates aim to explore scenarios of how Environmental Attribute Certificates (EACs) may be used by companies to meet their Scope 3 targets and create an easier way to reach their net zero targets.  

EACs have a broad definition and can include renewable energy certificates, carbon offsets, carbon credits, and much more. The SBTi released a full Call for Evidence on Market Mechanisms document late in 2023 that outlines what is included in EACs. This inclusion and broader definition allow companies to have new options and avenues to select from. Especially, when committing to key targets under the SBTi standard. In addition, this will encourage companies to reduce emissions through innovation and key technological improvements. 

With the inclusion of carbon credits in Scope 3 reduction methods, it is estimated that nearly $19 billion USD of new investment can be driven towards projects in the voluntary carbon market, helping make significant strides towards climate action efforts. 

An Overview of The Key Outputs Issued by The SBTi

Scope 3 discussion paper. This paper aims to inform and explain the basic principles and concepts the SBTi is considering. It’s important to note that the paper does not suggest any official rules or requirements yet. It’s more about starting a conversation and gathering feedback on the ideas presented. 

Evidence received on the effectiveness of Environmental Attribute Certificates. The SBTi held an open call from September to November 2023, asking people to submit their opinions and evidence about how effective Environmental Attribute Certificates (EACs) are at reducing carbon emissions. This document includes the information and evidence submitted during this period. Although, SBTi hasn’t yet evaluated this. 

Synthesis report of evidence on the effectiveness of Environmental Attribute Certificates in corporate climate targets – Part 1: Carbon credits. This report is the first of three that the SBTi is planning to publish. It includes a summary and analysis of all the evidence they received about how effective carbon credits are in helping companies meet their climate goals. The other two forthcoming reports will focus on different tools like Environmental Attribute Certificates (EACs). 

Findings of independent systematic review on the effectiveness of carbon credits in corporate climate targets. This statement summarizes the results of a study done by an independent group. It also explains how the study was conducted, what the key findings were, and any limitations or shortcomings of the research. Part of the research was to understand how effective carbon credits are when companies use them instead of directly reducing their own emissions. 

How do the SBTi publications affect the use of carbon credits for meeting Scope 3 emission targets?

The SBTi recognizes that there are different ways in which companies might use environmental attribute certificates when setting science-based climate targets. It also underlines how important it is for companies not to use credits as a way to avoid reducing emissions in their own operations or supply chain. Some ways in which companies can use carbon credits to reach their climate targets include:  

  • Show proof that they are actually reducing emissions within their supply chain.  
  • Help balance out emissions that can’t be avoided by storing carbon permanently.  

Some companies could also take on extra responsibility for their emissions. They could start using credits for emissions that aren’t covered by their current targets, encouraging more investment in climate action. 

Recent Updates on the SBTi Corporate Net-Zero Standard Revision

The SBTi has expanded the scope of the revision of its Corporate Net-Zero Standard to refine its approach to neutralization and other minor adjustments. This flagship Standard, first published in 2021, provides essential guidance for companies setting science-based net-zero targets.

The SBTi is hosting workshops to gather insights on neutralization strategies and the role of carbon dioxide removal and storage as companies work toward their net-zero target dates. The insights gathered during these workshops will inform a research paper to support the ongoing revision process.

The revision process aims to clarify the near-term actions companies can take toward the long-term goal of effectively counterbalancing scientifically defined residual emissions. Key goals the SBTi aims to achieve with this revision:

  1. Align with the latest scientific thinking and best practices.
  2. Address challenges related to Scope 3 target setting and implementation.
  3. Enhance continuous improvement and target delivery.
  4. Improve structure and interoperability with other SBTi standards and relevant frameworks.

The updated Corporate Net-Zero Standard is expected to be released for public consultation by the end of 2024, with a finalized version coming into effect in 2026. Until then, businesses should continue to rely on the current Corporate Net-Zero Standard V1.2 for their net-zero targets.

Next Steps for Companies

Here are some key actions companies should consider when it comes to their Scope 3 emissions reporting: 

  • Start with Key Suppliers: collect data from your direct suppliers (Tier 1). These suppliers often have the biggest impact and are likely to respond well.  
  • Keep It Simple: ask straightforward requests and avoid giving suppliers too much to do or setting unrealistic deadlines.  
  • Include Event Emissions: if your company hosts events, remember to add those emissions to your Scope 3 report.  
  • Match Reporting Standards: ensure your Scope 3 data fits with reporting guidelines and standards such as CDP, GRI, SASB, TCFD, and the SDGs.  
  • Aim for Complete and Accurate Data: keep gathering better information on Scope 3 and improve your results. 

How Cority Can Support

The world of sustainability reporting and disclosure changes constantly. As new guidelines and key updates to targets launch, it is helpful to have services and support from a trusted advisor. Cority’s Sustainability Cloud solution, along with our team of ESG and sustainability experts, supports organizations to advance their sustainability strategies across their value chain and beyond. 

Explore our library of key content covering Scope 3 emissions and how to start reporting in this area. 

To find new ways to meet and exceed your Net Zero goals, explore Cority’s Sustainability Cloud solution and connect with our ESG and sustainability experts today. 

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